1985 (10) TMI 179 - AT - Central Excise

Issues Involved:
1. Whether Rear Dumpers and Haulpak Rear Dumpers fall under Tariff Item 34 of the Central Excises and Salt Act, 1944.
2. Whether the show cause notice issued on 6-9-1980 is barred by limitation under Section 36(2) of the Central Excises and Salt Act, 1944.

Detailed Analysis:

Issue 1: Classification of Rear Dumpers and Haulpak Rear Dumpers under Tariff Item 34

Background:
The respondents, a government company manufacturing earth moving machinery, were issued a demand for excise duty on Rear Dumpers and Haulpak Rear Dumpers. The Karnataka High Court previously held that excise duty under Item 34 does not apply to motor vehicles not suitable for use on public roads and remanded the case for re-examination.

Arguments:
- The Department argued that Rear Dumpers and Haulpak Rear Dumpers are adapted for use on public roads and thus fall under Item 34.
- The respondents contended that these vehicles are not adapted for use on public roads and cited several decisions to support their case.

Analysis:
- Tariff Entry Interpretation: The Tribunal noted that all mechanically propelled vehicles adapted for use upon roads fall under the term "motor vehicles" in Item 34. The explanation to the entry excludes specialized equipment mounted on such vehicles from consideration.
- Precedent Cases: The Tribunal referenced the Supreme Court decision in Bolani Ores v. State of Orissa and the Delhi High Court decision in Hindustan Motors Ltd. v. Union of India, which supported the Department's view that vehicles designed for use on roads, even at slower speeds, fall under Item 34.
- Manufacturer's Pamphlet: The Tribunal examined the manufacturer's pamphlet, which indicated that the dumpers had features making them suitable for use on public roads, such as transmission systems, brake assemblies, and steering systems.
- Usage Evidence: The Tribunal considered evidence showing that the dumpers were driven on public roads for delivery, confirming their adaptability for road use.

Conclusion:
The Tribunal concluded that the Rear Dumpers and Haulpak Rear Dumpers are adapted for use on public roads and thus fall under Tariff Item 34 of the Central Excises and Salt Act, 1944.

Issue 2: Limitation of Show Cause Notice

Background:
The show cause notice was issued on 6-9-1980, challenging the Appellate Collector's order dated 17-9-1979. The respondents argued that the notice was barred by limitation under Section 36(2) of the Central Excises and Salt Act, 1944.

Arguments:
- The respondents contended that the show cause notice was issued beyond the permissible period.
- The Department argued that the assessment was not complete due to the classification dispute and that the period under Section 11-A should be considered.

Analysis:
- Legal Provisions: Section 11-A was given effect on 17-11-1980, but the assent was given on 6-6-1978. The Tribunal considered whether the period set out under Section 11-A could be invoked.
- Assessment Completion: The Tribunal found that the Department had completed the assessment and issued a demand, and the dispute was raised by the respondents.
- Time Bar: The Tribunal held that the third proviso to Section 36(2) applied, requiring the show cause notice to be issued within six months. Since the notice was issued beyond this period, it was barred by limitation.

Conclusion:
The Tribunal held that the show cause notice issued on 6-9-1980 was barred by limitation concerning the order-in-appeal dated 25-2-1971.

Final Judgment:
The appeal was partly allowed regarding the classification under Tariff Item 34, confirming that Rear Dumpers and Haulpak Rear Dumpers fall under this item. However, the appeal was dismissed concerning the demand related to the order-in-appeal dated 25-2-1971 due to the show cause notice being barred by limitation.

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